Summer

Electric grid operators in the Northeast will have no problem meeting summer demand even in the most extreme weather conditions as new supplies, including natural gas-oil generation plants, and demand-response resources enter service.

Perhaps more than ever, all eyes will be on the South Central region for natural gas markets this summer as robust associated production from oil wells and a projected doubling of natural gas exports will propel the market into uncharted waters. Factor in the need to refill historically low storage inventories and the potential for a major storm to hit the Gulf Coast, and the market is ripe for significant — though likely brief — price volatility.

June natural gas is set to open 2 cents higher Wednesday morning at $3.25 as traders study weather forecasts calling for concerted summer heat as well as Thursday’s anticipated lean inventory report. Overnight oil markets rose.

Henry Hub prices could see upward pressure later this summer as the current supply/demand balance erodes a roughly 300 Bcf storage surplus to the five-year average by August, according to analyst firm PointLogic Energy.

The Electric Reliability Council of Texas (ERCOT) should have enough generating capacity to meet expected power demand this spring and summer, the grid operator said Wednesday.

After natural gas markets failed to bat an eye at last week’s historic storage withdrawal, it’s no surprise to see forwards markets plunge by double digits this week.

Natural gas forwards markets tacked on another 20 cents on average between June 3 and 9 as market players were thrown by this week’s reported storage injection from the U.S. Energy Information Administration, according to NGI’s Forward Look.

Natural gas prompt-month forward prices posted double-digit gains between May 27 and June 2 as strong cash, bullish storage and supportive weather amped up the market, according to NGI’s Forward Look.

FERC on Thursday approved a group of market changes by the California Independent System Operator (CAISO) to mitigate against risks of power outages this summer due to the closure of the state’s largest underground natural gas storage facility in Southern California (see Daily GPI,May 19). As a result, generators in the area are expected to pay more for gas-fired generation this summer.